Apple’s €13 Billion Tax Controversy Faces CJEU Review

In a surprising twist, Giovanni Pitruzzella, the advocate general of the Court of Justice of the European Union (CJEU), is pushing for a reassessment of the 2020 ruling. This spared Apple from a colossal €13 billion ($13.9 billion) tax bill in the European Union. The Advocate General contends that the prior ruling should be reconsidered due to “a series of errors in law.”

Background: 2018 Directive and Ireland’s Tax Appeal

The roots of this contentious issue go back to 2018 when Apple was instructed to pay a substantial sum to Irish tax officials following the European Commission’s conclusion that Apple and Irish authorities had breached state aid rules. With its European headquarters in Ireland, a country known for favorable tax regulations, Apple strategically divided itself into Apple Sales International (ASI) and Apple Operations International (AOE) after receiving permissions in 1991 and 2007 from Irish tax authorities.

Commission’s Shift and General Court’s 2020 Ruling

Initially accepting these arrangements in 2016, the European Commission permitted Apple to exclude profits from intellectual property licenses held by ASI and AOE, resulting in reduced tax payments in Europe. However, in 2018, the Commission reversed its stance, alleging rule violations and demanding the €13 billion tax payment. In 2020, the General Court ruled in Apple’s favor, asserting the adherence to regulations in the Irish arrangement. Now, the CJEU’s Advocate General argues that the General Court erred in its assessment, opening the door to a potential case reexamination.

Uncertain Outcome: CJEU’s Independent Review

The outcome hangs in the balance as the CJEU is not bound by the Advocate General’s opinions. The call for an independent review underscores the need for the court to scrutinize the case thoroughly and issue a new decision.

Apple’s $25 Million Settlement: DOJ Addresses Hiring Discrimination

In a separate development, Apple has agreed to a $25 million settlement with the U.S. Department of Justice (DOJ) over allegations of hiring discrimination. The settlement responds to claims that Apple “illegally discriminated in hiring and recruitment against U.S. citizens and certain non-U.S. citizens.”

DOJ’s Allegations and Violation of Immigration Laws

The DOJ contends that Apple violated the Immigration and Nationality Act (INA) during recruitment for positions under the permanent labor certification program (PERM). This program allows employers to sponsor workers for permanent residence status, with explicit prohibitions against discriminatory practices based on citizenship or immigration status.

Ineffective Recruitment Procedures and Apple’s Response

The investigation exposed Apple’s failure to advertise PERM positions on its external job website and its requirement for paper applications. These recruitment procedures proved ineffective, garnering few or no applications from individuals with non-expiring work permits. Apple responded by acknowledging its unintentional violation of government standards. The company emphasized its commitment to compliance, implementing a robust remediation plan to meet the requirements of various government agencies while continuing its hiring practices in the U.S.

$25 Million Settlement: Penalties and Back Pay Fund

The $25 million settlement is divided between $6.75 million in civil penalties and an $18.25 million back pay fund for discrimination victims. Despite the substantial amount, this fine represents only a fraction of Apple’s considerable profits, highlighting the tech giant’s financial resilience in the face of legal challenges.